Download development of banking sector

Financing in Serbia
15th European Annual Meeting
European Consultants Unit
TABLE OF CONTENTS

Development of Banking Sector

Banking and Economy

Development of Raiffeisenbank a.d.

Precondition of Financing & Limitations

Outlook
DEVELOPMENT OF BANKING SECTOR
Prior to Political Changes in October 2000
Steady deterioration in the past 12 years prior to political
changes:
• Large number of banks
• Majority of banks undercapitalized
• Most banks overstaffed
• Banking sector small and not active enough
• Politically directed loans dominate the market
• Only basic banking products offered
• Lack of public trust in the banking sector
DEVELOPMENT OF BANKING SECTOR
After Political Changes
NBS creates the basis for healthy development of financing sector
• Significant reduction in number of banks through mergers & closures: Beobanka,
Beogradska banka, Jugobanka, Investbanka..
• Increased demand in terms of capital and quality
• Level of trust increased
Increase in deposits volume:
• June 2001 total retail deposits reached EUR 31 mio
• September 2006 total retail deposits over EUR 2,74 bn
Increase in loans volume:
• Until 2001 loans to customers were very modest
• During the last 3 years loans volume is increasing
Payment system transferred to commercial banks
Ownership structure of banks changed
TABLE OF CONTENTS

Development of Banking Sector

Banking and Economy

Development of Raiffeisenbank a.d.

Precondition of Financing & Limitations

Outlook
BANKING AND ECONOMY
Banks Assets - Share in GDP
Total Banks Assets as %of Serbian GDP
140%
125%
122%
120%
100%
80%
81%
60%
39%
40%
32%
38%
43%
20%
0%
1999
2000
2001
2002
2003
2004
2005
CONCLUSION:
Due to the closure of large banks and restructuring process undergoing in stateowned banks in Serbia the banks asstets‘ participation in Serbian GDP has declined.
Nevertheless, result of new entrants into Serbian banking sector, this ratio is
expected to increase.
BANKING AND ECONOMY
Total Credits - Share in GDP
Total Credits as % Serbian GDP
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
40%
32%
27%
21%
18%
23%
16%
1999
CONCLUSION:
2000
2001
2002
2003
2004
2005
Evident decrease of this indicator is a result of assets restructuring of state-owned
banks (i.e. Write-offs of bad loans). Following the resructuring of banking sector and
presence of foreign banks, participation of total credits in GDP has begun to increase
(126 % YoY 2003/04)
BANKING AND ECONOMY
Retail Loans - Share in GDP
Retail Loans as % of Serbian GDP
8%
7%
7%
6%
5%
4%
3%
2%
1%
0%
5%
3%
1%
1%
1999
CONCLUSION:
2000
1%
2001
2%
2002
2003
2004
2005
Retail market segment is the most dynamic in term of growth rates. The large
increase is primarily generated through much larger supply of retail loans in recent
years. There is still enough scope for further growth.
BANKING AND ECONOMY
1M BELIBOR
BANKING AND ECONOMY
EUR/CSD ANALYSIS AND FORECAST
In 2005 CSD nominal depreciation towards EUR was 8.4%, effective
depreciation was amounting to 7%


In 2006 up to now CSD depreciated for 1.29%
It is expected that the EUR/CSD would be around 87.5-88.5 level at
the end of 2006


Expectations are that CPI would be in range 9.5%-13.5%
31.12.2005
8 5 .5
31.03.2006 31.05.2006
31.08.2006 30.09.2006
31.12.2006
8 6 .9 0 0 5
8 4 .4 0 0 0
8 8 .0 0 3 9
8 7 .6 3 8 0
8 5 .8 3 1 7
This commentary is for information only and the comments and forecasts are intended to be of a general nature and are current as at the date of
issue.
Issued by Raiffeisenbank A.D., Belgrade who takes no responsibility for any individual investment decisions based thereon. This documentation is not
intended as an offer, solicitation or recommendation to buy or sell currency. Information is obtained from sources that are believed to be reliable but
their accuracy cannot be guaranteed. Relevant economic data has been taken from Statistical gazette of NBS, Economical gazette of NBS, Ministry of
finance of Serbia internet page, NBS internet page, Republic of Serbia statistic department.
Market position and growth rates
Market- position
No. of NWBs
Bosnia and Herzegovina
-3
Albania
Kosovo
Top 1
8
Slovakia
Serbia
Belarus
Romania
Croatia
-6
Bulgaria
Top 4
3
Czech Rep.
Hungary
Ukraine
(2)
Slovenia
Russia
(3)
>6
4
Poland
Ø EU-12
3,6% p.a.
0%
2%
____________________
(1) av. nom. GDP-growth 2004e-2007e (p.a.): 19,0 %
(2) av. nom. GDP-growth 2004e-2007e (p.a.): 14,0 %
(3) av. nom. GDP-growth 2004e-2007e (p.a.): 14,4 %
4%
6%
8%
10%
Average nominal GDP-growth 2004e – 2007 p.a.
> 12%
(1)
TABLE OF CONTENTS

Development of Banking Sector

Banking and Economy

Development of Raiffeisenbank a.d.

Precondition of Financing & Limitations

Outlook
RZB Group in CEE
RAIFFEISENBANK a.d. Belgrade
First bank established with 100% foreign capital in the country
The Bank‘s shareholders:
• Raiffeisen International
• IFC, World Bank Group
Equity – EUR 200 mio
More than 365,000 clients
54 branches
Universal bank for 4 main business segments:
• Corporate Banking
• Retail Banking – Private individuals
• Retail Banking – SMEs (small & micro enterprises and professionals)
•Treasury & Investment Banking
TOP 15 BANKS by total assets
1,800
1,664
1,600
1,400
511
400
446
390
313
AIK banka
Pro Credit
Bank
Alpha
Vojvodjanska
Societe
Generale
Komercijalna
Hypo AlpeAdria
Banca Intesa
Raiffeisenbank
-
HVB Bank
200
280
276
238
231
228
Erste
533
600
Meridian - CA
800
Volksbank
943
EFG Eurobank
1,000
NBG
1,118 1,077
1,061
1,200
As at: 30/06/2006 in million EUR
Source: NBS, under local statutary requirements, prepared by: Raiffeisenbank
TABLE OF CONTENTS

Development of Banking Sector

Banking and Economy

Development of Raiffeisenbank a.d.

Precondition of Financing & Limitations

Outlook
Preconditions for financing-limitations
Profile of the borrower:
•
•
•
•
Privately owned companies with undisputable ownership rights
Subsidiaries of Multinationals
State owned and mixed companies with good prospects of privatization
Track record of at least 2-3 years
Credit profile
• Purpose:
working capital financing, financing of investments,
project/trade financing
• Amounts:
• Tenors:
up to EUR 50 mio (current legal lending limit)
working capital financing: up to 2y
investments/project financing: up to 10y
• Collateral:
Mortgage, pledge on equipment and inventory,
bank/corporate guarantees and cash deposits,
assignment of receivables, unsecured etc
Preconditions for financing-limitations
Limitations
•Country risk: maximum tenor, costs of refinancing, maximum country limit
•Lack of country-wide land register
•Lack of available construction/industrial land in towns
•Legal restrictions: Law on Foreign Credit Transactions, necessity of registration of
international financing with National Bank of Serbia (reduction of flexibility)
•Costs of refinancing: mandatory reserve costs (60%), costs for political risk
•Still limited transparency of balance sheets but strongly improving
Improvements
•Significance of balance sheet, International Accounting Standards
•Positive track record with the bank, willingness and capability to repay
•Increasing of competition in the banking area
TOP 15 BANKS by total loans
917
123
114
111
109
95
Panonska
124
Volksbank
134
Agrobanka
209
Continental
238
NBG
Societe
Generale
HVB Bank
Komercijalna
banka
Hypo-AlpeAdria Bank
Banca Intesa
253
EFG Eurobank
396
Meridian - CA
501
AIK banka
599
Pro Credit
Bank
609
Raiffeisenbank
1,000
900
800
700
600
500
400
300
200
100
-
As at: 30/06/2006 in million EUR
Source: NBS, under local statutary requirements, prepared by: Raiffeisenbank
TABLE OF CONTENTS

Development of Banking Sector

Banking and Economy

Development of Raiffeisenbank a.d.

Precondition of Financing & Limitations

Outlook
Outlook - Plans
Outlook
•Increased
competition due to entrance of new banks into the market
•Increased mandatory reserve requirements
•Positive development of the country – current country rating: Standard & Poors
BB•More foreign Greenfield investments expected
•EU entry and further stabilization expected on mid term
Summary
Serbia is no longer a high risk country, currently ideal proportion between opportunity
and risk
Thank you for your attention!